Investa Commercial Property Fund and Manulife Acquire 39 Martin Place Sydney

21 January 2021

Investa Commercial Property Fund and international financial services group Manulife will acquire Macquaire Groups’ 39 Martin Place.

To be located in Martin Place, between Elizabeth and Castlereagh Street, the building will be situated in Sydney’s central business district. It will sit directly above the southern entrance of the new Martin Place metro station that is currently under construction and will incorporate 30,000 square metres of office space across 28 levels and 2,000 square metres of retail. 

39 Martin Place is scheduled to reach practical completion in 2024 and will be located within the Martin Place integrated station development. The much sought after precinct incorporates two office buildings, a Sydney Metro station and a retail precinct. Offering premium-grade services and large floorplates, the building will boast market leading sustainability credentials including a 6 star Green Star, office design rating and 5.5 star NABERS rating.

The exact details of the investment are yet to be revealed, however the project is expected to cost in excess of $800m.

Macquarie Bank won the rights to develop the over station precinct above the Martin Place Metro station in a controversial off market Unsolicited Proposal to the State Government paying $355m for the air rights to two towers.

Macquarie ran a sales process for the south tower in 2019 which has attracted interest from the domestic heavy weights including Charter Hall, CBUS, Dexus and ISPT. ISPT reportedly entered in a $900m+ deal on the tower however faced with significant investor redemptions, ISPT pull out of the deal.

ICPF Fund Manager, Brendan Looby said: “The acquisition of 39 Martin Place is in line with the Fund’s strategy given the superior building quality, super prime location, leading sustainability and technology features.  We also have the opportunity to add value through leasing. “This combination of factors is expected to deliver an attractive risk adjusted return to our investors, and further reinforces ICPF’s reputation as Australia’s leading prime office fund.”

On the leasing opportunity, Mr. Looby said: “We have high confidence in the Sydney CBD office market and believe 39 Martin Place is well placed to attract a suite of high quality users. We are pleased with the interest already shown by a number of prospective tenants attracted to the quality and premium location of 39 Martin Place, which will be loaded with amenity.”

ICPF’s partner is Manulife, a multinational insurance company and financial services provider, which has been actively investing and pursuing opportunities in Australia since 2017 via direct and indirect investments in the Australian office and logistics sector.

Kenny Lam, Senior Managing Director, Head of Asia Real Estate Investments for Manulife said: “We are very excited to partner with ICPF and team up with the best-in-class team from Investa on this landmark investment. 39 Martin Place will be a top grade office building in Sydney, equipped with one of the highest levels of technology and situated in a prime CBD locale giving unparalled access to a wide variety of public transport and facilities.

“Despite some of the headwinds resulting from the pandemic, we are continuing to focus our expansion efforts on the Asia Pacific region and high quality assets, which are supported by strong long term macro and demographic prospects.”

Investa’s Chief Investment Officer, Peter Menegazzo said: “We are delighted to welcome Manulife as an investment partner alongside ICPF in this landmark development and look forward to partnering with Macquarie and LendLease to deliver it.

“The investment provides another opportunity for Investa to demonstrate its deep leasing capability, and reinforces our strong belief in the Martin Place precinct as a premium office location.” 

The building is being constructed by LendLease and is due for completion in 2024. It is the latest investment for ICPF, following the recent completion of the highly acclaimed Sixty Martin Place development, delivered jointly by ICPF and Gwynvill.

The Fund’s portfolio of 15 office assets is valued at around $6 billion and is 94% occupied, with a weighted average lease expiry of about five years. ICPF is the top performing core fund on the MSCI/Mercer Australia Core Wholesale Property Fund Index over 2, 3, 5 and 7 year time horizons.